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Tuesday, May 10, 2011

The following is an extract from Elliott Wave Technician's April 2011 Investment Newsletter covering Silver (Published to subscribers 29th of April 2011):

Possibly a large structure is being completed in silver prices. Potentially a large "B" wave structure from early 1990 is in it's latter stages. The sentiment toward silver has reached dangerous extremes and strongly support a major trend change.

Here is a monthly chart of silver:

Silver is now very overbought on the technical indicators, and very extended over it's 200 day moving average. The large "B" wave structure is divided into an A, B and C wave of one lessor degree also marked in blue colours where the "A" and "C" wave each consist of a 5 wave structure marked in black colour. Negative divergence is developing on some of the technical indicators.

Silver meets important resistance from its former all time high of USD 50 from 1980. If the above count is correct the next major move should be a devastating multi year decline in a large wave "C". The alternative would be a major correction in the uptrend.

Here is a daily chart of "ZSL" which is a trading vehicle for shorting silver:

The surge in sell volume indicates capitulation. "ZSL" is very oversold with long term positive divergence developing on the technical indicators. A rally is likely, the first target is the 50 day moving average.

The 6 month cycle is shown with blue vertical lines. However, notice that this represents bottoms in silver. On this chart with reverse view (A trading vehicle shorting silver) it represent tops.

Recommmendations:
Silver looks like the greatest shorting opportunity of all.

Elliott Wave Technician's portfolio
We added a short position in Silver, using "ZSL" as a trading vehicle, on the 26th of April 2011 at USD 15.84 and sold the position on the 5th of May 2011 at USD 22.45 on avarage. The profit of the trade was 40%. We notified our subscribers within 10 min. of the buy and sell transactions.

See more about silver sentiment, analysis and charts that gives you a good long time perspective in the April 2011 Investment Newsletter (Published the 29th of April 2011). Subscribe at http://www.elliottwavetechnician.com/ or here.